conflict of interest

Virtually anyone who has followed the onshore drilling bonanza knows the name Aubrey McClendon and the company he co-founded, Chesapeake Energy.

McClendon was the hard-driving CEO and chairman of one of America’s most aggressive drilling companies, but he was brought down earlier this year after a string of financial scandals and potential conflicts of interest came to light. It turned out that at the heart of the natural gas industry’s poster child lay financial practices that drew the ire of investors, the attention of SEC investigators and the fixation of the news media.

But in the past several months there have been a series of largely under-reported events that demonstrate that Mr. McClendon's problems are by no means distinct.

With natural gas at historic low prices – the Wall Street Journal ran a column recently suggesting that the price of gas might even sink to negative numbers, so that producers would need to pay buyers to take it off their hands – it may seem odd to think that fracking is costly. But it’s true. Not just in terms of its environmental footprint, but also in terms of its financial costs.

And everyone should care about how expensive gas is, especially those concerned about energy security and the environment, because the answer will determine the fate of renewables, the way we use land and water, and whether our nation’s energy policies are fundamentally sound.

To understand what’s going on, you need to look at Chesapeake Energy, the second largest producer of natural gas in the US, the company described by its founder and CEO Aubrey McClendon as the “biggest frackers in the world.”

For 19 of the past 21 years, the company has operated at what investors call “cash flow negative” – last year by $8.547 billion dollars – meaning that Chesapeake has consistently spent a whole lot more than it earned. For decades.

To fund all that fracking, the company has been flipping land, engaging in so many financial transactions that it’s been said to resemble a hedge fund more than a gas driller.

McClendon's company has become the environmental Enron, with Chesapeake's accountants creating some of the most labyrinthine and impenetrable books since Enron, according to some investors.

I asked Bryce if he had financial ties to the fossil fuel industry after his debate appearance before the National Association of Regulatory Utility Commissioners conference on Monday. Not only did Bryce refuse to answer the question, he also launched into an angry, finger-pointing tirade saying that I’d “made up” the amount of fossil fuel support documented by Manhattan Institute records.

Bryce had penned an op-ed attacking renewable energy while promoting nuclear and fracked shale gas, with no disclosure in his byline about the Manhattan Institute’s fossil fuel clients. I offered Bryce's piece as an example in order to formally seek answers about the disclosure policy at the Times and whether it was adequate in light of the failure to disclose Bryce’s dirty energy backing.

I didn’t get a concrete answer from Public Editor Arthur Brisbane’s office – his assistant acknowledged that “this is a topic that interests due to the number of emails we receive from readers on it,” but rather than answer my questions or take action to highlight the policy oversight, he told me “We're going to keep your email on file in the event that we decide to tackle this issue in the future.”

With our attention at DeSmogBlog diverted in the ensuing months by the Keystone XL pipeline controversy, the ever-growing list of the Koch Brothers’ threats to decency and democracy, and other dirty energy issues to focus on, I felt that another group would be better suited to devote attention to the NYT disclosure matter. I asked my friend Gabe Elsner at the Checks & Balances Project to take a look at my blog about Bryce and the failed efforts to get a satisfactory answer from the NYT Public Editor’s office.

Well, I’m grateful to Gabe for following through, since the issue is finally gaining some recognition, with the launch of TrueTies.org (designed by Checks and Balances Project) and a petition by 50 journalists echoing the call for The New York Times to lead the industry by creating a disclosure policy for op-ed contributors.

The New York Times ran an op-ed last week by Robert Bryce of the Manhattan Institute, a group funded by Koch Industries, ExxonMobil and other polluters to confuse the public about climate change and energy issues. Robert Bryce goes to great lengths to portray solar and wind power as land-hogging energy choices. He suggests that fracked shale gas and nuclear are somehow more environmentally preferable energy options.

But one important question remains - why does The New York Times print such misleading opinion pieces without revealing the clear conflict of interest that a Koch/Exxon-funded front group representative has on such matters? Did the Times’ even ask, and does it do so as a matter of standard practice? {C}

Democracy is utterly dependent upon an electorate that is accurately informed. In promoting climate change denial (and often denying their responsibility for doing so) industry has done more than endanger the environment. It has undermined democracy.

There is a vast difference between putting forth a point of view, honestly held, and intentionally sowing the seeds of confusion. Free speech does not include the right to deceive. Deception is not a point of view. And the right to disagree does not include a right to intentionally subvert the public awareness.